Correlation Between Metropolitan West and Multi Manager
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Multi Manager at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Metropolitan West and Multi Manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Multi Manager High Yield, you can compare the effects of market volatilities on Metropolitan West and Multi Manager and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Metropolitan West with a short position of Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Multi Manager.
Diversification Opportunities for Metropolitan West and Multi Manager
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metropolitan and Multi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Multi Manager High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager High and Metropolitan West is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Metropolitan West High are associated (or correlated) with Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager High has no effect on the direction of Metropolitan West i.e., Metropolitan West and Multi Manager go up and down completely randomly.
Pair Corralation between Metropolitan West and Multi Manager
Assuming the 90 days horizon Metropolitan West is expected to generate 1.11 times less return on investment than Multi Manager. In addition to that, Metropolitan West is 1.21 times more volatile than Multi Manager High Yield. It trades about 0.14 of its total potential returns per unit of risk. Multi Manager High Yield is currently generating about 0.19 per unit of volatility. If you would invest 737.00 in Multi Manager High Yield on September 4, 2024 and sell it today you would earn a total of 115.00 from holding Multi Manager High Yield or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Metropolitan West High vs. Multi Manager High Yield
Performance |
| Timeline |
| Metropolitan West High |
| Multi Manager High |
Metropolitan West and Multi Manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Multi Manager
The main advantage of trading using opposite Metropolitan West and Multi Manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Multi Manager can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Multi Manager will offset losses from the drop in Multi Manager's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Multi Manager vs. Touchstone Large Cap | Multi Manager vs. Transamerica Large Cap | Multi Manager vs. Vela Large Cap | Multi Manager vs. Siit Large Cap |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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